Decision time for Brazil's top bankers

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Decision time for Brazil's top bankers

When they were winning, the traders of Garantia, Brazil's leading investment bank, were formidable masters of the universe, confident and overbearing. Now they are down - after substantial losses last year - no-one in Sao Paulo feels much pity. But beneath the emotions lie more serious issues: can the bank founded 27 years ago by former tennis champion Jorge Paulo Lemann survive independently? Will it be bought by an international house? If so, what will happen to its daring traders? Brian Caplen reports.

Addicted to secrecy

Serious and solitary


An investment bank's problems rarely prompt an outpouring of joy. But since Brazilian leader Garantia ran into troubles, triggered by last year's Asian crisis, competitors, ex-employees and even regulators and journalists have been out celebrating. They see Garantia's fall as a punishment for past arrogance and high risk taking.

A group of Sao Paulo traders were the most brazen in their Schadenfreude. They posted "for sale" signs on the cars of their opposite numbers at Garantia, just after it took a staggering hit in the Brazilian Brady bond market last October. Their actions were also prophetic - six months later Garantia is on the block.

After a period of denial, Garantia partners now admit they have held talks about a deal with several overseas banks, including Goldman Sachs. But with Goldman involved in its own debate on whether to go public, this prospect now appears less likely. A trip to Europe by Garantia founder and major shareholder Jorge Paulo Lemann late last month fuelled speculation that Credit Suisse First Boston is the frontrunner.

Lemann, a 59-year-old former tennis champion, who built the banking partnership from scratch (see box), is believed to want to sell the bank and concentrate on his other investments.


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